The Market in the Rearview Mears: Strong Absorption, Uneven Supply

By Broker, William Mears, CCIM, SIOR 

Industrial: Still the Engine

Industrial vacancy came in at 3.9% as of the third quarter — down 1.1 points from a year ago. That's a touch above our five-year average of 3.8%, but well below the ten-year average of 4.8%.

The absorption story is the one I like telling. Over the past year, the market absorbed 540,000 SF net. The clearest example: Serta Simmons' 500,000 SF build-to-suit in Janesville's industrial park freed up two older buildings — 200,000 SF in Beloit and 215,500 SF here in Janesville. Both are already backfilled, and not by one big user each — the Beloit building picked up two tenants, and the Janesville building picked up three. That's what a market with real demand looks like.

But don't mistake strong absorption for a market that's out of room. Availability is running higher, around 6.5% (roughly 2.1 million SF listed), and three buildings in Janesville account for nearly 700,000 SF of that space on their own. Of everything in this column, industrial is the one category where a serious user can still find real square footage — especially if you're looking at larger blocks.

Rents tell a similar story, at least on paper. New construction is asking $6.60/SF, up 1.7% year-over-year against a 1.2% national average, with logistics product leading the way at +2.0%. Older product and sublet space is asking closer to $4.50/SF. But asking is the key word — demand has been weak at either price point, so I wouldn't read that gap as real pricing power just yet.

Retail: Nearly Full, and the Mall Question

Retail started the year with four vacant mid-size boxes. Three are already backfilled, leaving one 30,431 SF in-line space still open. Strip centers around town are essentially at 100%.

The bigger story to watch is the former Janesville Mall. With Dick's and Kohl's anchoring either end and Woodman's Sports Center now open, attention is turning to what happens with the rest of that space and the surrounding acreage. That's a redevelopment conversation worth watching over the next year.

Office: A Different Kind of Tight

Office vacancy sits at 2.2% as of the third quarter, according to CoStar. Most of that vacancy is older product in the central business districts — not the space most tenants are actually looking for.

The real squeeze is in the small-suite range. Most office tenants in this market are looking for 1,500 to 3,500 SF, and availability in that band is close to zero. If you're a tenant in that size range, plan early — there isn't much sitting on the shelf.

Residential: Catching Up, Slowly

There are 168.58 acres currently on the market for single- and multi-family development, which is a healthy number on paper. What's more interesting is the construction activity starting to show up behind it.

Single-family permits totaled 59 for all of 2025, and we're already at 45 through just the first five months of 2026. Multifamily is moving even faster — 8 buildings and 16 units for all of 2025, versus 9 buildings and 30 units already through May of this year. Both categories are building from a small base, so don't read too much into the percentages, but the direction is clear: more housing is coming than we saw last year, across both categories.

The Takeaway

My read on this market: absorption's been strong across the board, but industrial isn't out of room yet, especially in the bigger blocks. Retail, office, and residential are where space is genuinely tight. Not a bad spot to be in — plenty of momentum, still room to grow. If you're a tenant or buyer, know which category you're in before you assume there's nothing out there.

As always, if you're trying to figure out what any of this means for a specific property or decision, give me a call.